How to reduce Salesforce licensing cost
LAST UPDATED: JULY 2018
While Salesforce makes for a great CRM, its licensing is a bit complex. A number of AppExchange installations fail because of wrong user licenses or features, and many organizations pay way more than required because they fail to understand how to optimize their licenses.
Here are some tips on how to reduce your Salesforce licensing costs.
Do not Signup for Packages Blindly
The full-blown Lightning Unlimited license costs $300 per user per month. While this option offers developers everything that is available in Salesforce, and hence unrestricted convenience, businesses would rarely require access to all features. Most businesses invariably end up paying for features and functionality they do not require. Businesses can save on licensing substantially by subscribing to other Lightning licenses. However, not all packages may be a good deal, and users need to evaluate each licensing option carefully via-a-vis their business requirements.
Explore Enterprise Edition Licenses
Salesforce offers several alternatives to the Lightning Unlimited license
Organizations with a strong in-house development team may be better off developing their own apps and availing the Salesforce Lightning Enterprise edition license. The Lightning Enterprise Edition, with deep customization, costs $150 per user per month, billed annually. Users with this license can access custom apps developed in-house, and also core platform functionality such as accounts, contacts, reports, dashboards, documents, and custom tabs. Users get access to features such as API integration, , team selling, collaborative forecasting, territory management, custom code, customizable sales console, partial sandbox, up to 25 developer sandboxes, and mobile two-factor identity. However, they face restrictions on user permissions, opportunities, forecasts, and a few other features. For instance, users cannot create or edit dashboards.
Consider Starter Licenses
Until now, users who need access to just one custom app could have saved significantly by subscribing to the Force.com – One App license. These licenses were the same as the Salesforce Platform license, but limited to the use of just one custom app, and only read-only access to Accounts and Contacts objects. Such license users have access to an unlimited number of custom tabs. While users who already have valid force.com licenses can hold on to the same, Salesforce has discontinued the force.com licenses for new users.
The basic license offered by Salesforce now, for enterprises developing simple and straight-forward apps, is the Lightning Essentials license. The Lightning Essentials license offers out-of-the-box CRM capabilities, with access to up to 10 objects per user, for $25 per user per month.
The Lightning professional edition license costs $75 per user per month, and offers the full blown functionality.
All editions access the same database, and get access to the same accounts and contacts enjoyed by users of Salesforce Enterprise Edition.
Take Advantage of Salesforce Modular Build
The type of license notwithstanding, Salesforce.com adopts a modular approach, offering add-on functionality at an additional cost to the basic offering.
For instance, mobile functionality, knowledge base module, offline access, visual workflow, partner and community portals and more, each cost extra as top-up to the basic license fee. Gartner estimates that achieving the desired industry-specific process functionality in the Service Cloud offering could result in an additional 25% or more in costs to the basic subscription.
While the modular structure allows users to pay only for what they need, reaping the advantage requires having a clear-cut idea on the exact functionality required. For instance, a feature license entitles a user to an additional Salesforce feature, such as Marketing or Connect Offline. It selects users who really require such features rather than subscribing it for all users.
Also, many Salesforce subscriptions fail to calculate the correct capacity in terms of storage, objects and tabs requirements, and end up either getting billed for exceeding capacity or overbuying capacity. For instance, if the required level of customer support is not done at the time of sign-up, it can cost as much as 15% to 25% to an Enterprise Edition subscription when added later.
Manage Users Proactively
Regardless of the type of license taken, one license allows only one user to log-in, and it is not possible to users to share their login credentials.
In the eventuality an employee holding a Salesforce license quits, it makes sense to log a case, citing “License Reduction” in the subject field, to de-activate the license and re-assign it to someone else. Organizations with a large number of licenses can reduce the license costs substantially over time by adopting such a strategy proactively.
Salesforce terms and conditions do not allow reduction in the number of users’ subscriptions during the subscription term, and as such the reductions in the number of licenses would apply only during the license renewal time. This makes it worthwhile to go in with the minimal number of license required and add licenses as required.
Finally, it pays to negotiate. Gartner estimates Salesforce.com subscribers who do not negotiate renewal price protections to witness significant increases in costs before the second renewal.
Track actual usage of the app over time, and if usage is low, try and negotiate with Salesforce.com during the annual renewal phase. For example, if the organization has 500 enterprise user licenses but only 250 users log in at any given time, it is worthwhile to negotiate for a discount for this mismatch of functionality. Success depends on whether such an argument is supported with cold facts – in this case, the usage data.
Salesforce ranks among the very best CRM. Apply the above tips to enjoy the power of this truly intuitive CRM without having to spend too much.
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